Credit Checks for Employment – Are You a “Good Hire?”

Your credit history determines whether or not you’ll qualify for loans; the interest you’ll pay; if a landlord will rent to you; and, granted that you do get the apartment, if the electric, cable, gas and water companies will set up your utility service. But should credit affect your ability to get a job? Credit checks for employment purposes could determine whether you land that new gig.

About 47% of employers run credit checks for employment purposes. In most cases, this depends on the position they are hiring, and the company is likely not checking credit reports for all applicants. Only about one in eight companies run credit checks for all applicants.

Who’s at risk?

Our credit counselors see many clients who wish to change jobs but must improve their credit first. The most frequent professions that require credit checks for employment include government workers (with the military, post office, city, county, state, fire and police departments), teachers and daycare workers, aerospace workers, and those with access to money–retail salespeople, bank tellers, and finance officers. Some of these credit checks are required by law. Check your state’s laws to see if your position requires a credit check.

What’s Changing about Credit Checks for Employment?

Legislators have been debating whether credit checks for employment purposes are fair to consumers. Many people were hit by the recession, and their credit may have suffered. Is it really fair to require these people pass credit checks for employment? Some argue that it can create a vicious cycle and may even be a form of discrimination. Several states have put rules in place to prevent or limit the damage from credit checks for employment. To read more about the laws in your state, see our sources below.

Here is a list of states with current or upcoming legislation about credit checks for employment.

California

Colorado

Connecticut

Hawaii

Illinois

Maryland

Nevada

Oregon

Vermont

Washington

What can I do?

Find out what’s on your credit record before you need to find work. You may obtain free copies of your credit report once a year at annualcreditreport.com. On this website, you can receive one copy of your credit report from Experian, Equifax, and TransUnion. It’s a good idea to compare these, as each report may be a little different. Another strategy is to pull one of these reports at a time. That way, you will actually have access to a free report every four months.

If you can’t make sense of the information on your credit report, consult with a consumer credit counselor at Clearpoint. Your counselor can help interpret this information and give advice on how to improve your credit.

If you don’t like what you see on your credit report, just remember that there is no quick fix. The number one thing you can do is to pay your bills on time. Then, learn how to pay off debt and keep it low. If you follow these guidelines, you could see improvements in several months. Also, consider some of the new ways to build credit. These might help you speed up the process.

A poor credit history doesn’t mean you won’t get a job. Nearly half of employers run credit checks for employment, but half don’t. If your other qualifications and references are good, employers are likely to give you an opportunity. If you work on more effectively managing your credit before you need it, you’ll be in the best possible position when searching for work.